Business travel and demand for meetings are both on the rise, according to three hotel industry executives. Speaking to analysts on third quarter earnings calls, the CEOs of Marriott, Hyatt and Choice voiced growing optimism about the hotel industry’s recovery.
Boosted by the Memorial Day weekend, the US hotel industry wrapped up the second quarter on a positive note with occupancy at its highest levels since late February 2020. However as the third quarter progressed, uncertainty brought on by delta variant put a drag on the return of the business traveler throughout the summer.
In the fall, COVID-19 case numbers declined and vaccination rates picked up, causing business travel and group demand to resume their upward trends – numbers which are reflected in the earnings reports for the quarter.
At Marriott, group demand “accelerated nicely” in the US and Canada in the third quarter, according to the hotel group’s CEO, Anthony Capuano. He noted that group room revenues for the quarter were down 46 percent versus the third quarter of 2019. That’s a significant improvement over the second quarter 2021, which saw a decline of 76 percent versus the same time period in 2019.
Group bookings have also been increasing, Capuano added.
Most importantly, average daily rates for groups continue to rise and are currently projected to top pre-pandemic levels by nearly 4 percent. Capuano said that special corporate – a segment that represents business transient customers who booked at pre-negotiated rates – was most impacted by the delta variant during the quarter, when return to office timelines were delayed.
The segment, which accounts for roughly half of business transient room nights, provides the best picture of business demand trends. Special corporate bookings showed steady recovery each month this year until a slight pullback in the back half of the third quarter, but returned to its gradual upward trajectory in October with bookings versus 2019 growing each week during the month.
The special corporate bookings are currently down less than 40 percent compared with the same timeframe in 2019.
Capuano said that based on conversations with corporate customers, it’s evident that “many of them, especially those with more client-facing jobs, are increasingly eager to get back on the road.”
Transient business travel will continue a gradual recovery as more workers return to the office, guest visitation policies are relaxed and greater numbers of employees are permitted to travel again.
“We also expect the traditional business trip to continue to evolve with a blurring of the lines between business and leisure travel,” Capuano said.
Hyatt Hotels Corporation CEO Mark Hoplamazian told analysts on Hyatt’s third quarter call that the company is pleased with the progress of group and business transient demand. He said the delta variant increased levels of cancellations in August and early September and kept demand slow immediately following Labor Day.
However since that time, Hoplamazian said, cancellations have declined, while short-term group demand has strengthened. The upward momentum has been steady through September and October, with the rate of improvement in group during October particularly meaningful.
The company’s largest corporate accounts have grown by 50 percent since June, Hoplamazian reported, and Hyatt continues to be encouraged by dialogue with its corporate customers who are returning to offices in bigger numbers, with many planning on a more robust return to travel in 2022.
Choice Hotels International
On the third quarter earnings call for Choice Hotels International, CEO Patrick Pacious said business traveler demand “has returned to levels similar to the third quarter of 2019.”
While acknowledging that the Choice portfolio has historically been focused on leisure demand, Pacious noted, “We also see continuing momentum in our business travel trends, with anticipated additional runway for growth. We’ve continued to witness sequential quarter-over-quarter increases in our business travel bookings in the third quarter of 2021.”
Looking ahead to the first half of 2022, Pacious told analysts, “We are pretty excited about sort of the trends we’re seeing in the sort of post-pandemic recovery about the types of consumers that are showing up in our hotels that we had not seen before.”